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Definition
1) limited funds or resources to spend
2) you must pay a price to obtain a good or service |
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| all the different combinations of goods and services a consumer can purchase given a specific income level and prices of those goods and services |
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| changes in budget constraint |
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1) changes in income
2)changes in prices of the goods |
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| satisfaction derived from consumption of a good or service (measured in units) |
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| the additional utility gained from consumption of an additional unit |
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| spending should be allocated across goods so that the MU per $ is the same for each good |
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Definition
1)per unit tax
2) ad-valorem tax (%of price) |
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Definition
| who's paying what fraction or portion of the tax |
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Definition
| want to increase trade (Reverse tax) |
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Term
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Definition
| (Tax) x (Qbar-- amount of units) |
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Term
| perfectly competitive market |
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Definition
| a market in which no buyer or seller has any influence over the market price |
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Definition
| takes marker price as given |
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Definition
1)standardized or homogeneous product
2)each buyer and seller is going to constitute a minimal fraction of the market
3)free entry and exit into the market (no barriers)
4)buyers and sellers are well informed (perfect information) |
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Definition
| some period "sufficiently short" in which at least one of the firm's factors of production is fixed |
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Definition
| all the inputs used to produce a good |
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Definition
| period of time where all factors of production are variable |
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Definition
| sum of all costs involved in production of a good.... these are the same, regardless |
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Definition
| sum of all variable costs involved in production |
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Definition
| change with the level of production |
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Definition
| in the long run in a perfectly competitive market, there are ____ profits |
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Term
| 3 assumptions built on monopoly theory |
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Definition
1) single seller (can't buy from anyone else)
2) no close substitutes
3) extremely high barriers to entry |
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Term
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Definition
1) legal barriers
2) patents
3) licenses
4) economies of scale
5) exclusive ownership of a necessary resource |
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Definition
| extremely pronounced economies of scale |
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Definition
| power to set their own price above MC=MR |
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Term
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Definition
| charging different prices to different consumers for same product absent of cost differences |
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Definition
1) start where MC=MR
2) Q* (find the respective quantity)
3) find consumers maximum willingness to pay |
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Definition
| market structure between perfect competition and a pure monopoly |
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Term
| monopolistic theory based on 3 assumptions |
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Definition
1) many buyers and sellers
2) heterogeneous (or differentiated products)
3) easy entry and exit in the industry |
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Term
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Definition
1) dominated by a small number of firms
2) can be an identical or differentiated product
3) high barriers to entry |
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Definition
1) players
2) all possible strategies
3) set of payoffs |
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Term
| strategic interdependence |
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Definition
| your best action depends on others actions and their best action depends on your play |
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Definition
| defines all possible strategies and the payoffs of the strategies |
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Definition
| best choice regardless of your rivals choice (you play same move no matter what) |
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Definition
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Definition
| any combination of strategies, in which each players strategy is his best response, given the other players choices |
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Definition
| a game where each player has a dominant strategy and when each plays it, the resulting payoff is smaller than if each had played a dominated strategy |
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Definition
| a repeated prisoners dilemma game where players cooperate on the first move and mimic their partners last move on each successive play |
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Definition
1)still have complete information
2)play unfolds over a period of time
3)players can react to prior moves |
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Definition
| describes possible moves in a game of sequence that correspond to each possible combination of strategies |
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Definition
| a threat to take an action that is in the threateners (promisers) interest to carry out |
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